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Home / Companies / News /  Phoenix Mills, GIC set up a $733-mn JV

Mall developer Phoenix Mills Ltd (PML) and Singapore’s sovereign wealth fund GIC Pte. Ltd on Wednesday said they have jointly set up a $733 million investment platform for retail and office assets in India.

GIC will acquire a significant minority stake in the retail-led, mixed-use portfolio of projects that will be located in Mumbai and Pune. These properties of around 3.4 million sq. ft. of leasable space are among Phoenix Mills’ operational assets.

The transaction closes at a time when shopping malls and offices have been shut for over a month due to regional curbs.

Lee Kok Sun, chief investment officer of real estate, GIC, said, “…With the management capabilities of PML, we believe that the joint venture will generate resilient long-term returns. GIC has been investing in India for more than a decade and our long-term confidence in the Indian real estate market remains strong."

The transaction is subject to relevant regulatory approvals.

“We recognize that the global crisis is impacting consumer sentiment and that the lockdown has made it challenging for all businesses, especially those in the retail sector. However, the long-term structural growth that the Indian retail industry continues to offer due to favourable demographics, urbanization, growing middle class, and increasing consumerism trends will still benefit the joint venture. We expect continued strong performance in the retail sector as organized retail penetration increases and population density remains high," said Kishore Gotety, co-head (Asia), real estate, GIC.

Phoenix Mills had signed a term sheet in December 2020 with GIC, where the latter would sell 26% stake in select assets at an enterprise value of 5,600 crore.

Last week, Phoenix Mills and Canada Pension Plan Investment Board said they have signed definitive documents for a new joint venture to develop a shopping mall in Kolkata’s upscale Alipore area. CPP Investment has committed an investment of 560 crore in Mindstone Mall Developers Pvt. Ltd in tranches, for an ultimate equity stake of 49%.

Atul Ruia, chairman, Phoenix Mills, said, “Through this platform with GIC, we intend to jointly explore value‐accretive acquisition opportunities. Proceeds from the transaction received by PML will act as growth capital to both PML and its subsidiaries to explore and further enhance our portfolio of annuity income assets."

After the GIC and CPP deals, Phoenix Mills would have around 2,000 crore cash surplus in hand to explore fresh opportunities. “The disruption has tested the elasticity of our business model and has sharpened our capital budgeting to become even more secure for underwriting our decadal growth plans. As restrictions start relaxing, we are optimistic of a sharp re‐bound in consumption, as we experienced post the first wave," said PML’s MD Shishir Srivastava.

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